Despite Rise In December, US Home Prices Saw Weakest Full-Year Gain Since 2011

For the fifth straight month, US home prices across its 20 largest cities rose in December (according to the admittedly lagged and smoothed Case-Shiller data released today). The 0.47% MoM rise is down very mopdestly from the upwardly revised +0.53% MoM in November

Source: Bloomberg

However, “national home prices grew just 1.3% for the year – the weakest full-year gain since 2011,” according to Nicholas Godec, CFA, CAIA, CIPM, Head of Fixed Income Tradables & Commodities at S&P Dow Jones Indices.

“Two structural forces have reshaped the market over recent years: mortgage rates and inflation,” Godec continued.

“The 30-year mortgage rate closed 2025 at 6.2%, well above the 4.8% 10-year average and a sharp contrast to the 3.9% average that prevailed from 2016 through 2020. Meanwhile, annual inflation for 2025 came in at 2.7% — modestly below the 3.1% 10-year average — but still outpaced home price appreciation by 1.4 percentage points, effectively eroding real home values for most owners. This marks a notable reversal: Over the prior decade, national home prices outpaced inflation by 3.7 percentage points annually, a dynamic that has quietly reversed, with real home price returns turning negative in June 2025.

…but, declining mortgage rates suggest the rebound in aggregate prices could be about to explode…

Source: Bloomberg

Is this what President Trump wants to see? Flat prices and lower mortgage rates means more affordability…